Concepts and definitions of energy hardship / fuel poverty

The concept of fuel poverty originally comes from the United Kingdom. Brenda Boardman’s thesis (1988) and subsequent books (1991, 2010) brought this issue to the attention of researchers. Unlike in New Zealand, fuel poverty measures have formed part of government policy in the United Kingdom since the 1990s, and more recently have been a focus of International Energy Agency reports (Heffner and Campbell (eds), 2011).

Initially Brenda Boardman defined fuel poverty as households who would spend more than 10 percent of their income to keep the home at an acceptable level of warmth. When she carried out her research (in the late 1980s), 10 percent was twice the median expenditure on fuel as a proportion of household income in the United Kingdom.

World Health Organization (WHO) recommended indoor temperatures – of at least 21o C in living areas and 18o C in other rooms in the house (Hills, 2012, Ormandy and Ezratty, 2012) – have been used to define an acceptable level of warmth. Lower ambient indoor air temperatures – particularly when under 12o C – are believed to present a health risk to vulnerable people, such as the very old or very young.

It is hard to measure whether households are in fuel poverty (spending too much on domestic energy because of dwelling inadequacy) without direct information about the thermal efficiency of dwellings although it can be modelled (see Howden-Chapman, Viggers, et al, 2012). Housing researchers in New Zealand (O’Sullivan, Howden-Chapman, and Fougere, 2015) note that the lack of sufficient information about energy requirements and thermal performance of dwellings have hindered measurement of fuel poverty in New Zealand. In the United Kingdom, this information is collected in the English Housing Survey and the Scottish House Condition Survey.

There has been a range of research on fuel poverty since 1991. This research has reinforced other negative consequences of fuel poverty. For example, Ormandy and Ezratty (2012) note:

An inadequate supply of energy may also mean an inadequate supply for other basic domestic needs such as for food storage and cooking, maintenance of personal and domestic hygiene, and artificial lighting. Each of these could result in threats to health such as food poisoning, spread of infections, slips and fall injuries, fire injuries (from candles or oil lamps) and carbon monoxide poisoning (from inappropriate unflued heat sources).

In New Zealand, fire risk from inadequate housing has led to both injuries and fatalities. A fire research report that looked at fatalities as a result of fires in the 1990s found that around 10 percent occurred in temporary accommodation such as caravans, tents, and garages. The use of candles in dwellings without electricity was implicated in a small number of fatal incidents (Duncanson et al, 2001).

Measurement of energy hardship will allow us to identify households and groups of people who are likely to be vulnerable to this range of negative outcomes.

Figure 1

Essentially, households are considered to be in fuel poverty if energy costs, to maintain minimum acceptable indoor temperatures, are excessive when compared with overall household income (Heffner and Campbell (eds), 2011). Fuel poverty is complex and caused by a combination of factors including housing quality and the efficiency of heating appliances, along with low household income. It is therefore not just an issue of income poverty. Low quality, uninsulated housing costs far more to heat and maintain at a reasonable indoor temperature. Housing and health researcher Jonathan (2004, p 33) writes:

Fuel poverty may be considered different to general (income) poverty. Income poverty can be eradicated efficiently through income support (as has been noted in Boardman, 1991), whereas the eradication of fuel poverty requires not just income subsidisation but also crucial investment in the capital stock (i.e. the household), as fuel poverty is caused by a complex interaction between low income and domestic energy inefficiency.

He notes that low-income households tend to live in older dwellings with poor heating and insulation. Fuel poverty is of concern because of the link between poor housing quality and poor health outcomes.

Health consequences of inadequate heating and cold, damp housing

Cold, damp housing can result in higher seasonal mortality rates and higher incidence of both cardiovascular and respiratory disease (Healy, 2004, Howden-Chapman et al, 2009). This has been observed in the United Kingdom, particularly in Ireland, and also in New Zealand (Hales, Blakely, et al, 2010). For example, a study of 40,000 excess deaths in England and Wales linked poor housing and poverty to low indoor temperatures and deaths related to cold (Johnson and Griffiths, 2003, quoted in Heffner and Campbell (eds), 2011). Living in a state of energy deprivation is associated with adverse impacts “on physical and mental health, well-being and social functioning” (research cited in McChesney, 2013).

New Zealand also has high levels of excess winter mortality and morbidity. In New Zealand, researchers estimate that 1,600 more people over 65 die each year during winter (Davie et al, 2007) than would have been expected (excess winter mortality). This has a cost to the economy as well as to the individual or household experiencing poor quality housing and cold indoor temperatures. As the 1995–2005 New Zealand Household Energy End-Use Project (HEEP) discovered, New Zealand homes were consistently under-heated. Under-heating was more severe in low-income homes. This study showed that only one-third of all households in the lowest income quintiles managed to heat their living room to an average temperature of above 16oC on winter evenings (Howden-Chapman, et al, 2011, p 2). They also found a strong relationship between house age and living room temperature (French et al, 2006).

Research from an International Energy Agency (IEA) report (Deborah Frank in Grayson Heffner, Nina Campbell, 2011, p20) also found that in the USA, energy insecurity was correlated with underweight children, “due both to children’s physiology and the simple physics of a high surface‐to‐mass ratio, which increases heat loss in cold environments.”

Children and young people are considered to be at particular risk of suffering adverse health effects from energy hardship (O’Sullivan et al, 2017).

Much of the research on this topic comes from Northern Europe, particularly the United Kingdom, from both government and academic researchers. However, in recent years both Australian and New Zealand researchers have looked at aspects of fuel poverty measurement and the relationship between insulation, home heating, and health. They have also studied the experience of households using prepayment metering (O’Sullivan et al, 2014, 2016).

There have been some attempts to estimate the extent of fuel poverty in New Zealand. Researcher Bob Lloyd calculated it to be around 10–14 percent of households (2006), while a later study by Philippa Howden-Chapman et al (2012) estimated that around one-quarter of New Zealand households were in fuel poverty:

New Zealand has a poor history of housing regulation, so existing houses are often poorly insulated and rental properties are not required to have insulation or heating. Average indoor temperatures are cold by international standards and occupants regularly report they are cold, because they cannot afford to heat their houses. Fuel poverty is thought to be a factor in New Zealand’s high rate of excess winter mortality (16%, about 1,600 deaths a year) and excess winter hospitalisations (8%).

A recent survey by a group of researchers, including students from Waiopehu College (O’Sullivan et al 2017), asked young people about their experiences of energy hardship. The study found that young people were more likely than adults to report that their home was often or always cold. They also reported that living in a cold house resulted in increased negative mental and physical symptoms, such as feeling sad or experiencing asthma. Around 6.4 percent of their respondents had experienced electricity disconnection because of non-payment of bills in the previous 12 months.

New Zealand has relatively high rates of disconnections for customers who have been unable to pay their bills, compared with the United Kingdom and Victoria, Australia (Howden-Chapman et al, 2009). In 2013, Consumer found that around 37,000 households had been disconnected in 2012 (Consumer, 2013). A 2016 publication from the Electricity Authority showed that electricity disconnections for non-payment fluctuated considerably in recent years, from 44,055 in 2006 to a low of 10,775 in 2008. These disconnections equated to just under 0.5 percent of domestic connections, and do not include the automatic disconnections that occur when a prepayment meter runs out of credit.